It is well known that all P&I Underwriters exclude liability for loss of or damage to deck cargo where the fact of deck loading is not recorded on the bill of lading. The exclusion of cover also arises where the cargo is not suitable for carriage on deck, even if deck loading is mentioned on the bill. In both cases, the carrier is exposing himself to abnormal or improper risks.
The nature of the risk in the second instance is self-evident. Some cargoes are not suitable for deck carriage under any circumstances, at least if not containerised. Bagged foodstuff or sensitive electronic equipment are obvious examples, The Managers was once asked to approve cover for a racehorse on deck but fortunately, before the inevitable reply was given, he decided to go by BA. The likelihood of damage in such cases is so great that it falls beyond the scope of the P&I Insurance.
However, the exclusion from cover for failing to record “loaded on deck” in the bill of lading is not so obvious. The reason is that where a bill of lading does not mention deck loading, it is assumed that the cargo is stowed under deck. The very fact of loading on deck, in such a case, is itself normally a breach of the contract of carriage.
There may be circumstances where the carrier is protected from claims for unauthorised deck loading. For example, if there is a custom of the trade (as sometimes may be the case for containerised traffic) or if the bill of lading contains a “liberty” to load on deck, the carrier may so load, even without notice to the merchant. However, it should be remembered that a bill of lading is a document, which comes into existence after the cargo is on board the vessel. There may be a pre-existing charter-party or booking note, which expressly requires the cargo to be loaded under deck. A carrier cannot protect himself against breach of such an express contract by reference to a trade custom or by subsequently issuing a bill containing a liberty clause.
Where a bill of lading properly records the loading of cargo on deck, the carrier’s liability for that cargo is not usually governed by the, Hague or Hague-Visby Rules. Those Rules do not apply to goods which are loaded on deck and which are so described in the bill of lading.
Some forms of liner bills of lading expressly apply the, Hague or Hague-Visby Rules to deck cargo in such cases, but in general, the carrier’s liability for damage to cargo which is recorded as stowed on deck will be governed by other terms of the bill of lading. Thus, a complete exclusion of liability for deck cargo is possible. Conversely, if the bill of lading contains no other terms governing liability, the carrier may have no defence at all, save for Act of God or inherent vice.
It has been held by the English High Court that where the bill of lading states that deck cargo is at “shippers’ risk”, that excluded the carrier’s liability even where the deck stowage left the vessel in an unseaworthy condition. However, it has also been held that, while the words “shippers’ risk” placed on the shippers the cost of re-stowage of deck cargo, which had shifted, the words did not include the cost of getting to a port of refuge where the re-stowage work was carried out.
There remains the question:- what is the position where the cargo is loaded on deck but without recording that on the face of the bill of lading? In principle, the, Hague or Hague-Visby Rules should still apply to that cargo, since those Rules, as mentioned above, are excluded only where the bill of lading does actually record deck loading. However, in some countries, the unauthorised loading of cargo on deck is treated as such a serious breach of contract that the carrier is not allowed to rely on the normal defences in the Rules.
That was the position taken until recently by the English court. However, in April of 2003, the Court of Appeal in London considered a case (The Kapetan Petko Voivoda) in which 8 excavators, each worth about US$100,000, had been washed overboard during heavy weather on a voyage from Korea to Turkey. The excavators had been booked on terms, which expressly stated that they were to be loaded under deck. They were indeed so loaded at the original load port, but at a subsequent port of call, they were shifted onto deck to make space for other cargo. The bill of lading, having been already issued at the first port, did not of course record that the cargo was stowed on deck. Neither did the bill contain a liberty to load on deck, or even, an exclusion of liability, but in any case, a liberty clause does not itself amount to a record that the cargo is loaded on deck, and that was also expressly forbidden by the booking note.
There was little doubt that the loading of the excavators on deck was a breach of contract, but the carrier claimed the benefit of the package limit in Art 4.5 of the Hague Rules (since the bill of lading incorporated the Hague Rules as enacted in Turkey, that would have limited the claim to a few cents, or at most £100 gold per unit). The cargo claimants argued that the seriousness of the breach prevented the carrier from relying on the limit in Art 4.5, but the court disagreed and held that the right to limit under the Hague Rules was still available. As a result, a rather expensive claim reached a cheap result, fortunately for the owners since the claim of course fell outside their P&I cover.
As mentioned already, this may not be the position in other jurisdictions, where unauthorised loading on deck could expose the carrier to unlimited claims.
It is well known that all P&I Underwriters exclude liability for loss of or damage to deck cargo where the fact of deck loading is not recorded on the bill of lading. The exclusion of cover also arises where the cargo is not suitable for carriage on deck, even if deck loading is mentioned on the bill. In both cases, the carrier is exposing himself to abnormal or improper risks.
The nature of the risk in the second instance is self-evident. Some cargoes are not suitable for deck carriage under any circumstances, at least if not containerised. Bagged foodstuff or sensitive electronic equipment are obvious examples, The Managers was once asked to approve cover for a racehorse on deck but fortunately, before the inevitable reply was given, he decided to go by BA. The likelihood of damage in such cases is so great that it falls beyond the scope of the P&I Insurance.
However, the exclusion from cover for failing to record “loaded on deck” in the bill of lading is not so obvious. The reason is that where a bill of lading does not mention deck loading, it is assumed that the cargo is stowed under deck. The very fact of loading on deck, in such a case, is itself normally a breach of the contract of carriage.
There may be circumstances where the carrier is protected from claims for unauthorised deck loading. For example, if there is a custom of the trade (as sometimes may be the case for containerised traffic) or if the bill of lading contains a “liberty” to load on deck, the carrier may so load, even without notice to the merchant. However, it should be remembered that a bill of lading is a document, which comes into existence after the cargo is on board the vessel. There may be a pre-existing charter-party or booking note, which expressly requires the cargo to be loaded under deck. A carrier cannot protect himself against breach of such an express contract by reference to a trade custom or by subsequently issuing a bill containing a liberty clause.
Where a bill of lading properly records the loading of cargo on deck, the carrier’s liability for that cargo is not usually governed by the, Hague or Hague-Visby Rules. Those Rules do not apply to goods which are loaded on deck and which are so described in the bill of lading.
Some forms of liner bills of lading expressly apply the, Hague or Hague-Visby Rules to deck cargo in such cases, but in general, the carrier’s liability for damage to cargo which is recorded as stowed on deck will be governed by other terms of the bill of lading. Thus, a complete exclusion of liability for deck cargo is possible. Conversely, if the bill of lading contains no other terms governing liability, the carrier may have no defence at all, save for Act of God or inherent vice.
It has been held by the English High Court that where the bill of lading states that deck cargo is at “shippers’ risk”, that excluded the carrier’s liability even where the deck stowage left the vessel in an unseaworthy condition. However, it has also been held that, while the words “shippers’ risk” placed on the shippers the cost of re-stowage of deck cargo, which had shifted, the words did not include the cost of getting to a port of refuge where the re-stowage work was carried out.
There remains the question:- what is the position where the cargo is loaded on deck but without recording that on the face of the bill of lading? In principle, the, Hague or Hague-Visby Rules should still apply to that cargo, since those Rules, as mentioned above, are excluded only where the bill of lading does actually record deck loading. However, in some countries, the unauthorised loading of cargo on deck is treated as such a serious breach of contract that the carrier is not allowed to rely on the normal defences in the Rules.
That was the position taken until recently by the English court. However, in April of 2003, the Court of Appeal in London considered a case (The Kapetan Petko Voivoda) in which 8 excavators, each worth about US$100,000, had been washed overboard during heavy weather on a voyage from Korea to Turkey. The excavators had been booked on terms, which expressly stated that they were to be loaded under deck. They were indeed so loaded at the original load port, but at a subsequent port of call, they were shifted onto deck to make space for other cargo. The bill of lading, having been already issued at the first port, did not of course record that the cargo was stowed on deck. Neither did the bill contain a liberty to load on deck, or even, an exclusion of liability, but in any case, a liberty clause does not itself amount to a record that the cargo is loaded on deck, and that was also expressly forbidden by the booking note.
There was little doubt that the loading of the excavators on deck was a breach of contract, but the carrier claimed the benefit of the package limit in Art 4.5 of the Hague Rules (since the bill of lading incorporated the Hague Rules as enacted in Turkey, that would have limited the claim to a few cents, or at most £100 gold per unit). The cargo claimants argued that the seriousness of the breach prevented the carrier from relying on the limit in Art 4.5, but the court disagreed and held that the right to limit under the Hague Rules was still available. As a result, a rather expensive claim reached a cheap result, fortunately for the owners since the claim of course fell outside their P&I cover.
As mentioned already, this may not be the position in other jurisdictions, where unauthorised loading on deck could expose the carrier to unlimited claims.
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